An unsubstantiated rumor posted on a CNN website caused a sharp drop in Apple’s stock price Friday. The early morning report caused Apple shares to plummet to their lowest point in a year. Apple denied the report as soon as they heard about it, and Apple’s stock recovered by the time CNN removed the false report, but Apple stock ended down 3 percent for the day due to the broader market slide.
The Apple stock free-fall was in response to a post on CNN’s "citizen journalism" website iReport.com. ZDNet was able to capture the fake post before CNN deleted it:
So how can a single false Internet article wipe out billions of dollars in market value from one of the world’s most famous technology companies? Because if it appears on the Internet, it must be true. Well, not quite.
If the news item had appeared on some guy’s blog, few would have likely paid attention. But the article appeared on a CNN-sponsored news site. CNN states in the fine print: "The views and content on this site are solely those of the iReport.com contributors. CNN makes no guarantees about the content or the coverage on iReport.com!" But combine CNN’s credibility with trigger-happy short-term traders, and you have a new way to manipulate the stock market for personal gain. As a result, the Securities and Exchange Commission will investigate the fake article to see if it was posted for illegal purposes.
This incident has taught us a few things:
- With the current capital market meltdown, investors are crazy skittish.
- You can’t believe everything you read on the Internet.
- Apple needs to start broadening its upper management, for Apple seems to have become "The Steve Jobs Company."
Article published on October 6, 2008
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